Didi Chuxing says it will partner with Chinese car makers, not acquire

The firm says it has no intention to make cars.

Beijing-based ride-hailing giant Didi Chuxing could be looking into buying up car Chinese cars manufacturers amidst falling valuations in the country’s car sector, Reuters predicted in its Breakingviews column today. The lines between technology-based transportation companies and the traditional car industry are blurring rapidly, the author argues making such acquisitions a likely outcome. A possible candidate would be Alibaba-backed electric car startup Xpeng Motors, says the column.

Indeed, habits around transportation have been greatly affected by technology. Owning a car is no longer seen as a must-have; other modes of transportation like ride-hailing are a good enough and cheaper alternative. Carmakers are reeling from the swift decline in demand and more changes can be expected.

Didi, in response to KrAsia’s request for comment on the prediction, denies any plans to acquire Xpeng Motors or any other carmaker. The firm says it has “no intention of making cars”, but also didn’t rule out possible partnerships in the sector.

The ride-hailing firm has already ventured into the traditional car sector with various tie-ups.

During the launch of Didi Auto Alliance (D-Alliance) in April this year, Didi’s founder Cheng Wei said he believes that armed with half a billion user downloads, Didi’s operational scale, and data capabilities, the firm is in the position to partner with OEMs, by pooling each comparative advantages together to change the future of transportation landscape as a whole.

Didi Auto Alliance (D-Alliance) was formed with a primary objective to develop low-cost electric vehicles, and the mission is to bring 1 million electric vehicles into the market by 2020. The 31 members of the alliance include Nissan, Toyota, Mitsubishi, and others. Didi has been making moves towards this goal, inking tie-ups with Chinese automaker BAIC Group and German car-parts maker Continental.

Didi’s push into the electric vehicle, as well as autonomous driving space, is no surprise, as transportation technology firms are looking for ways to integrate with the whole car manufacturing lifecycle, which will also bring advantages to Didi going forward in terms of managing fleet efficiency and costs. However, outright acquisitions aren’t yet on the agenda, at least per its current public standpoint.

Didi is in the midst of a major restructuring exercise, boosting its efficiency and safety measures after a challenging 2018.

Editor: Nadine Freischlad